USD/CAD holds steady above mid-1.3900s amid mixed cues; remains confined in a familiar range

• USD/CAD ticks higher on Monday as softer Oil prices undermine the commodity-linked Loonie.

• A downgrade of the US credit rating and Fed rate cut bets weigh on the USD, capping the major.

• Hopes for an eventual US-Canada trade deal further warrant some caution for bullish traders.  

The USD/CAD pair struggles to gain any meaningful traction during the Asian session on Monday and remains confined in a familiar range held over the past week or so. Spot prices currently trade around the 1.3965-1.3970 region, nearly unchanged for the day amid mixed fundamental cues.

Crude Oil prices kick off the new week on a softer note and undermine the commodity-linked Loonie, which, in turn, is seen as a key factor acting as a tailwind for the USD/CAD pair. However, the emergence of some US Dollar (USD) selling holds back bullish traders from placing aggressive bets and caps the upside for the currency pair.

Investors seem convinced that the Federal Reserve (Fed) will cut rates further amid signs of easing inflation and the likelihood that the US economy will experience several quarters of sluggish growth. Apart from this, a surprise downgrade of the US government's credit rating keeps the USD depressed and keeps a lid on the USD/CAD pair.

Meanwhile, US Vice President JD Vance discussed fair trade policies with Canada's Prime Minister Mark Carney on Sunday. This raises hopes for an eventual trade deal between the US and Canada, which should offer some support to the Canadian Dollar (CAD) and warrants some caution before positioning any upside for the USD/CAD pair.

Moving ahead, there isn't any relevant market-moving economic data due for release on Monday, either from the US or Canada. That said, speeches by influential FOMC members will drive the USD and provide some impetus to the USD/CAD pair. Apart from this, Oil price dynamics might contribute to producing short-term trading opportunities.